While the rate of mortgage defaults by churches remains relatively small, 2009 was still a challenging year for houses of worship. We asked three lenders active in the church market to tell us what churches facing a financial crisis should do in 2010 if they aren't able to make their mortgage payments:
Henry Chi, Evangelical Christian Credit Union:
1. Evaluate your ministry priorities in light of the present situation. Based on those priorities, review your programs and budget, then reallocate financial resources, cut expenses, and, if necessary, cut programs that don't align with your priorities. Circumstances like this can be a catalyst for thinking more strategically.
2. Communicate with your lender. Inform the lender of the actions you're taking, find out if there are ways to restructure your banking accounts to reduce fees and increase returns, and ask if the lender will work with you to modify your loan.
3. Evaluate your financial management. Beyond looking at expenses and banking practices, review your cash management policies and procedures to be sure funds are being handled best. We recommend doing so through a grid of ministry banking priorities that examine cash flow, liquidity, and stewardship of other ministry assets, such as real estate and personnel.
4. Keep watch. Ministries capable of making their mortgage payments should monitor the impact of the economy on their community and congregation, and develop forecasts that will enable them to make proactive decisions should their situations change.